You can’t eat money — which partly explains why rich countries and private investors have been on a spending spree in much of the developing world, buying up every square foot of farmland they can lay their hands on from Cambodia to the Congo. It’s the latest international land grab – the new colonialism — under which nearly 50 million acres of farmland have either changed hands in the past three years, or are currently under negotiation. Billions of dollars are at stake.
For relatively rich food-importing countries like Saudi Arabia, Kuwait, South Korea and China, it’s all about food security. By buying up farmland in less affluent nations like Paraguay, Pakistan, Madagascar, Ethiopia and Sudan, they are able to guarantee future food supplies for their own people at affordable cost by outsourcing the production to countries where land and labor are comparatively cheap. Proponents say it’s a win-win situation, in which struggling economies get a financial shot-in-the-arm from the much-needed investment, and the investors can rest easy knowing where the next meal is coming from.
But land is a finite resource, and critics warn that much of the land being traded in these transactions is being taken away from small-scale farmers who have no other way of supporting themselves or feeding their families. Indeed, a new report from the San Francisco-based Oakland Institute argues that the win-win scenario deliberately sidelines the issue of food security for the poor, and the plight of the independent farmers who are being displaced from their land or turned into plantation workers. According to the report, an estimated 1.02 billion people – one sixth of humanity – suffer from chronic hunger; and in one of the world’s cruelest ironies, 70 percent of that starving population live and work on small-scale farms in rural areas. Those are the very people who stand to lose the most in this new form of “food colonialism.”
But that’s only part of the story.
Food Security vs. Financial Speculation
The other part of the story was first revealed just over a year ago in a groundbreaking report by the international non-governmental organization GRAIN. Titled, Seized: The 2008 Land Grab for Food and Financial Security, the report identified “two parallel agendas driving two kinds of land grabbers.” On the one hand are those rich countries that rely on food imports and worry about future security amid the threat of soaring prices and crippling shortages on the international food market. But on the other hand are those international investors and speculators looking to maximize their financial gain at any cost. If there are any bad guys in this business, these guys would be the leading contenders. According to GRAIN:
“For a lot of people in power, the  global food crisis laid bare an overarching problem: that no matter where you look, climate change, soil destruction, the loss of water supplies and the plateauing of monocultured crop yields are bearing down as big threats on our planet’s future food supplies. This translates into forecasts of tight markets, high prices and pressure to get more from the land. At the same time, the finance industry, which has gambled so much on squeezing money from debt and lost, is looking for safe havens. All these factors make agricultural land a smart new toy to make profits with.”
In short, the food crisis, coupled with the broader financial crisis, has turned control over land into an important new magnet for private investors.
For these investors, the formula goes like this: food has to be produced, prices will likely remain high, and cheap land is currently available in poor countries, therefore an investment in farmland is bound to pay off. It was against this backdrop that GRAIN first sounded the alarm on how “an army of investment houses, private equity funds, hedge funds and the like have been snapping up farmlands throughout the world,” aided and abetted in the process by supposedly reputable international agencies like the World Bank, its International Finance Corporation and the European Bank for Reconstruction and Development. All these agencies are now in the business of “greasing the way for this investment flow” by pressuring governments in poor countries to change land ownership laws in favor of foreign investors.
Some of the biggest names in private investment – from Deutsche Bank and Goldman Sachs to Morgan Stanley and BlackRock Inc. were among last year’s leading land grabbers. The countries they targeted for farmland acquisitions included Malawi, Senegal, Nigeria, Brazil, Paraguay, Ukraine, Uzbekistan, Russia, Georgia and Australia.
But it is the role of the international financial agencies and institutions in this process that many consider to be particularly odious. When I discussed this issue last spring with Anuradha Mittal, executive director of the Oakland Institute, she described it as nothing short of “colonization all over again.”
“Instead of talking about land reform and constructive measures like land redistribution that would enable poor people to engage in a useful profession by growing food for their families and their communities, what we find these agencies promoting is the sale of land as an investment opportunity,” she explained. “What makes this trend especially dangerous is that poorer countries which are facing food insecurity, and where the poor are going hungry, are now seeing their land taken away for meeting the needs of the rich in the rich countries. And the entire process is accompanied by an enormous amount of arm-twisting in the name of aid. We have to go after that trend and highlight it, and drag this Dracula into the sunshine.”
That’s exactly what her Oakland Institute has attempted to do in its latest report released this fall. Titled, The Great Land Grab: Rush for World’s Farmland Threatens Food Security for the Poor, the report warns that throughout history, wherever corporate agribusiness has established itself in developing countries, the effect has been either to drive independent farmers off their land, or to reduce them to servitude through plantation labor. It documents multiple case studies from Latin America and the Caribbean to the Philippines, in which such transactions have fuelled social unrest, deepened socio-economic inequities, spawned political upheaval and generated even greater food insecurity.
“The history of foreign direct investment in agriculture belies the claim that the current land acquisitions will positively impact the development of poor nations,” says Shepard Daniel, lead author of the new report and a fellow at the Oakland Institute. “No matter how convincing the claim that these massive international acquisitions will bring much needed agricultural investment to poor countries, evidence shows there is simply no place for the small farmer in the vast majority of these land-grab situations.”
That’s precisely the message that small farmers and their supporters took to Rome this week, where they convened a People’s Food Sovereignty Forum to coincide with the 2009 World Food Summit sponsored by the United Nations Food and Agriculture Organization. The summit was attended by dozens of world leaders. Let’s hope the world leaders were listening.